Les interactions fiscales verticales à la lumière de la théorie des multiprincipaux
The very essence of both federal and unitary countries is multi-tiered governments. This architecture typically involves some commonality of tax bases between higher- and lower-level authorities. This process points to the existence of vertical externalities, i.e. of an inefficiently high degree of taxation. The central purpose of this paper is to explore the distribution of taxing powers among tiers of governments, and to analyze the nature and the consequences of the vertical externality that arises when different levels of government share joint property tax bases. To that end, the multi-principal theory is highly relevant since the different layers of government can be regarded as competing power centres. We provide a simple taxation model and consider a structure of overlapping governments that co-occupy a same tax base. We show that an independent behaviour of both levels of government results in the cumulated tax rate being too high with respect to a cooperative solution. Actually, when she independently makes her choice and unilaterally raises her tax rate, each level of government ignores the losses of fiscal receipts that other levels will suffer from the induced contraction of the shared tax base. Hence she under-valuates the social marginal cost of raising tax revenue from the common tax base. However, information asymmetry tends to lower the global level of taxation as some rents have to be given up to firms in order to make them reveal their private feature. JEL classification: D72, D82, H23, H30, H32, H71, H77
Volume (Year): 78 (2012)
Issue (Month): 1 ()
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